Shares of Snap (NYSE:SNAP) are down at a 2-year low after the social media company reported disappointing sales amid an advertising slump.
Shares of Snapchat’s owner Snap plummeted more than 35% at the market open Friday after the company reported disappointing Q2 2022 sales. The report pushed Snap’s stock to its lowest mark since April 2020 and wiped a combined $80 billion from social media stocks.
Social Media Stocks Sharply Decline Following Snap’s Q2 2022 Report
Social media stocks lost a combined $80 billion Friday after Snap reported worse-than-expected second-quarter sales as advertisers cut back on spending. The company’s shares plunged 35% at the market open, standing at $10.60 at the time of writing.
Snap’s report sent other major social media stocks declining including Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL), and Pinterest (NYSE:PINS). Shares of Twitter (NYSE:TWTR) are also in the red after the company missed revenue expectations and declined to provide guidance amid growing uncertainty around its deal with Elon Musk, who put the transaction on hold earlier this year.
Snap reported an adjusted loss per share of 2 cents in Q2, while analysts were projecting a loss per share of 1 cent. The company generated $1.11 billion in revenue, up 13% from the year-ago quarter, but below the analysts’ estimates of $1.14 billion.
Snap reported 347 million Global Daily Active Users (DAUs), slightly above the consensus projection of 344.2 million. Snap also did not provide guidance for the current quarter as the “forward-looking visibility remains incredibly challenging.”
Advertisers Cut Spending, Snap Slows Hiring
During the earnings call, Snap said sales came in weak mainly due to a significant slowdown in demand for its online ad services. The company added some of its advertisers had cut back on spending due to 4-decade high inflation and supply chain constraints.
Moreover, the company said other factors including Apple’s privacy changes, and intensifying competition from companies like TikTok also weighed on its financial performance. Today marks the second time when Snap has triggered a sharp sell-off in the social media sector.
Snap failed to meet analysts’ expectations even after reducing its guidance earlier this year. The company said the second quarter of this year proved more difficult than anticipated and as a result, the social media giant intends to “substantially slow our rate of hiring, as well as the rate of operating expense growth.”